Poland’s EU Presidency in the Shadow of Eurozone Crisis

Poland’s EU Presidency in the Shadow of Eurozone C

Andrzej Turkowski
ArticleOctober 31, 2011

Summary

Poland, a non-eurozone member holding the rotating EU presidency for the first time, faces difficulty pushing ahead its agenda because of the eurozone crisis. The crisis also risks diminishing the successes the Polish presidency has achieved thus far.

The beginning of October marked the halfway point of Poland’s first time chairing the rotating European Union presidency. But taking into account the work rhythm in Brussels with August being largely a holiday month, the coming weeks will largely determine the effectiveness of Warsaw’s presidency.

Although the Polish government was well aware of the rather reduced profile of the presidency under the Lisbon Treaty, it took the challenge of the chair seriously. Poland, who bears in mind the experiences of the Czech Republic and Hungary whose EU presidencies were criticized on the basis of internal problems, wishes to prove to the sometimes hasty critics from “old Europe” that member states from “new Europe” can carry out the job faultlessly.

Thus, the government in Warsaw invested serious financial resources, establishing a presidential budget higher than those of Germany or Sweden. A vast corpus of civil servants was sent to the Permanent Representation in Brussels and a well-established public relations company was hired to train Polish spokespersons and diplomats.

Polish Prime Minister: “The Answer to The Crisis is More Europe, More European Integration”

In terms of its priorities for the presidency, Warsaw selected economic growth and increased cooperation with EU’s neighbors, as well as the enhancement of stability and security of European citizens, including the military dimension of security.

Apart from these particular aims, Poland wants to revive faith in the EU and “export” its enthusiasm and optimism for the European integration, announced Prime Minister Donald Tusk at the European Parliament. This is not just idle talk. According to polls conducted in 2011, a sizeable number of Poles—83 percent—have a positive attitude toward their country’s membership in the EU.

However, before the presidency even started, it had been clear that Warsaw’s plans would have to be adjusted to the unexpected and fast-changing situation inside and outside the EU. The escalating eurozone crisis has dominated European politics and has called into question Poland’s capacity as a non-eurozone member to influence the situation.

Yet the government has attempted to stop it from being pushed to the side of European policy and prevent the emergence of a two-speed Europe (countries with the euro and those without)—a threat to Poland since its accession to the EU in 2004. Tusk wrote to EU member states’ leaders calling for the prompt implementation of changes in the Instrument for Stability and Finance Minister Jacek Rostowski appealed for immediate decision-making aimed at countering the crisis. In a somewhat dramatic speech at the European Parliament, Rostowski warned of the possible eurozone collapse and the subsequent disintegration of the whole EU if rapid actions were not taken.

Still, the most important decisions about the eurozone’s future are made among its members—if not during heated France-Germany negotiation. Poland, as the Centre for European Policy Studies’ analyst Piotr Maciej Kaczynski noted, could play the role of a mediator, rather than a party forcing its interests or solutions.

Poland can already boast a major success. During the Economic and Financial Affairs Council meeting in Wroclaw on September 16, ministers of finance agreed to adopt a so-called “six-pack” of bills on economic governance. Ten days later, it was accepted by the European Parliament. Thus, the improvement proposed by the European Commission in 2010 has finally been agreed to.

The reform aims at enhancing surveillance of macroeconomic policies of all EU member states and reinforcing of budget discipline on the basis of the Stability and Growth Pact (for eurozone members). The most controversial resolutions involve stricter discipline of eurozone countries, including implementing semiautomatic sanctions when their budget deficit exceeds the 3 percent threshold or 60 percent of public debt. Moreover, it includes preventive sanctions that force member states to correct their macroeconomic policy.

Poland brokered the compromise solution, ending a year-long negotiation between the Council of the European Union, which objected to autonomic imposition of sanctions, and the European Parliament (who sided with the European Commission), which voted for a more austere change. Consequently, according to the key element of the compromise, the European Commission’s recommendation for sanctions is approved unless the majority of euro-zone members (excluding the member whose case is under discussion) decide to reject it.

Thus, the “six-pack,” described by Polish European Minister Mikolaj Dowgielewicz, as a “backbone of real economic management in the EU,” provides the strongest tool for economic governance in the history of the EU. Still, in the current situation it is seen as just a small step to cure eurozone problems.

Poland Aims to Secure the MFF Negotiation Agenda

The other two issues on the Polish presidency’s economic agenda, described by the head of the advisors to Prime Minister Tusk Pawel Swieboda as a “European classics,” consist of moderating the beginning of negotiations of the EU Multiannual Finance Frameworks (MFF) for the 2014-2020 period and strengthening the single market.

Although the negotiations of MFF are unlikely to be finished by the end of 2012, Poland is moderating the beginning of discussion. Its first aim was to ensure that the European Commission’s proposal, seen in Warsaw as relatively favorable, served as the basis for further discussion. This was secured during the unofficial meeting of European affairs ministers in Sopot in July 2011.

Given the crisis situation in Europe, there is no doubt that the voices calling to cut national spending will get stronger and stronger. In a position paper published in September in eight countries, each being the net contributor to the EU budget, including Britain, France, and Germany, called for lower expenditures, reflecting the tough budget cuts.

Warsaw, as the main beneficiary of European Cohesion Policy, favors an expanded budget, and thus along with the European Commission and other net beneficiaries, opposes the lower expenditures the above-mentioned countries favor. As the Presidency Strategy reads, Poland opts for the EU budget as “an investment tool significantly contributing to the EU economic growth.” To counter arguments calling for retrenchments in the national budgets, Poland supports the European Commission’s proposal for obtaining its own resources through a tax on financial transactions and an EU-wide value-added tax. Given the relatively strong opposition to these proposals (especially to introduce this tax only within the EU) coming from London which leads the “slim-budget coalition” of the countries signatories of mentioned document, the recommendation may be used as a tool in budget negotiations.

The outcome of the negotiations is far from predictable. Moreover, as the first place on the European agenda is indisputably reserved for Greece and the eurozone crisis, it is not attracting much attention. As a result, the budget conference organized by the rotating presidency in Brussels last week—initially thought of as one of the major events and the first chance for national parliament members to have their say in negotiations—went practically unnoticed.

EU Neighborhood Policy: Inching Towards Broader Cooperation With the East

In regards to EU’s external relations, Poland’s position is that extended cooperation with EU neighbors not only enhances Europe’s international position and increases security, but is also beneficial for its economy. Thus, another aim of the Polish presidency has been to emphasize that the money Europe invests in its neighborhood is anything but charity. Such an approach could be seen as an attempt to provide support for what was to be the key event of the Polish presidency, the Eastern Partnership (EaP) Summit in Warsaw.

As the co-founder and major supporter of the EaP, Poland faced a number of unfavorable circumstances, reducing the profile of the meeting in Warsaw. First, the Arab Spring had upset the fragile balance of the EU foreign policy agenda in regards to the European Neighbourhood Policy. Then there were troubles within the EaP region itself. As a result, the summit, overshadowed by the trial of former Ukrainian Prime Minister Yulia Tymoshenko and the Belarusian delegation’s refusal to participate in the meeting, could not be seen as anything more than a moderate success, if even that.

Trying to draw attention to the progress made, Tusk noted, “We have specified our vision of a visa-free regime for all the interested participants in the Eastern Partnership.” Indeed as the joint declaration of the Summit reads, the visa-free regime is no longer a “long-term goal,” but a process dependent on outlined requirements, such as agreements on re-admission or border security. It should be seen as nothing more than a modest step in an arduous process, which is how the EaP is seen as a whole.

The problem concerning democratic standards in the neighborhood was highlighted by a rift over a declaration on the situation in Belarus. Eventually, five partner countries abstained from signing it. Given that Azerbaijan and Armenia are considered authoritarian or hybrid regimes and Ukraine and Moldova as flawed democracies, their reticence to condemn Belarus President Alexander Lukashenko indeed could be seen as an honest attempt to take a clear account of their own domestic situation.

The Ukrainian case in particular is a headache for Warsaw. Taking into account that Tymoshenko was sentenced to jail for seven years in a trial widely seen as politically motivated and with the more charges filed against her, Poland’s closest ally in the East again seems to losing direction on its “European path.”

All this has been happening on the eve of signing of a long-anticipated association agreement that was to finally confirm Kiev’s “European choice.” However, Yanukovych dismissed the outside pressure to take steps leading to Tymoshenko’s release. Consequently, his visit to Brussels was canceled and the question of Ukraine joining the Customs Union with Belarus, Kazakhstan, and Russia again reemerged. This possible change of foreign policy vector was hinted at by leading Ukrainian politicians. During a meeting with Russian President Dmitry Medvedev, Yanukovych said that Ukraine is “looking for a form of cooperation with the Customs Union” and this form “will depend on many components.”

Although for Warsaw, Ukraine joining the Russian-led Customs Union is a geopolitical nightmare, it can’t afford to neglect the democratic standards issue. Indeed, it was the Polish foreign affairs minister who, at the beginning of 2011, proposed the creation of a pro-democracy foundation to support democratic changes in neighboring countries and was the first major European politician to visit Libyan insurgents during Libya’s battle to overthrow long-time dictator Moammar Qaddafi.

The European Endowment for Democracy, which initially was met by criticism for duplicating existing institutions, gradually gained support from the European Commission and the EU High Representative for Foreign Affairs and Security Policy, Catherine Ashton. In September, Ashton agreed to the Polish proposals to create the endowment on the basis of international treaty open to EU members and the European Commission. The detailed proposals are currently being prepared and if that work is completed by the end of December, Warsaw will be able to boast another success.

The rotating presidency’s pro-openness agenda also includes the EU accession process for Croatia and Serbia. The membership treaty with Croatia is to be signed in December. Poland is insisting on hosting the ceremony, as it is in line with the image Poland has been trying to create.

During his visit to Belgrade in May 2011, Tusk declared that Serbia achieving the status of candidate country was a primary aim of Poland’s EU presidency. However, this issue is much more complicated than the Croatian case. Although the European Commission has recommended that the Council grant Belgrade the status of candidate country, it has also linked it with talks between Serbia and Kosovo. Given the recent tensions between the two states, the future of the accession process is unsure.

Uncertain Appraisal of the Overshadowed Presidency

Despite the fact that the Polish rotating presidency is not yet over, some general conclusions can be made. First of all, the eurozone crisis not only thwarted Poland’s plans, but also created the real threat of the two-speed EU. Thus Warsaw, instead of setting the tone of European politics, is anxious about its position in the core of European integration. The Prime Minister Tusk’s flat denials of this clearly noticeable process, seem only to confirm the argument. Moreover, the very fact that Poland holds the presidency has itself been overshadowed.

Still, realizing the agenda is one thing and administrating and smoothing the negotiation processes is another. These are not the kind of activities that make the headlines but certainly are of high value among European politicians and Brussels officials, creating an image of a valuable member. So far Poland has finalized negotiations on the “six-pack” reform on economic governance and pushed ahead works on European Patent—issues opened during the previous presidencies but ones that weren’t able to be resolved. However, Poland hasn’t managed to moderate the agreement on Schengen zone enlargement with the accession of Bulgaria and Romania.

Also, the cooperation between Polish Foreign Affairs Minister Radek Sikorski and Ashton has been successful. Sikorski several times acted on behalf of the EU high representative, which not only helped to move forward Poland’s presidential agenda and relieved Ashton from numerous duties, but also helped to shape a model of cooperation in European foreign policy following the signing of the Lisbon Treaty.

Another feature of the rotating presidency is that the well-established alliance of Poland and the European Commission has been strengthened through the budget negotiations and the agreement on the “six-pack” reforms. The unifying aim of Poland and the European Commission is to strengthen the supranational dimensions of the EU, and thus, to a large extent, balance the Franco-German tandem which has the tendency to relegate power from Brussels to major capitals.

One may find it unfair, but the general image of the Polish presidency will rely strongly on the success of the management of the euro crisis. The outcome of eurozone negotiations may turn out to be undeservedly beneficial or harmful to the country’s image. If the solution achieved among eurozone members is effective, the Polish presidency will likely be associated with overcoming the crisis and deepening the integration of the EU. If not few may even bother to evaluate it.

Andrzej Turkowski is a visiting researcher at the Carnegie Moscow Center.